Tuesday, October 18, 2016

The newspaper industry’s colossal mistake was a defensive digital strategy

shafer-columnI hesitate to give more attention to a study and Politico Magazine column that comforted newspaper nostalgists, but I must: Both are BS.

“What If the Newspaper Industry Made a Colossal Mistake?” asks the Politico headline, echoed in Jack Shafer‘s breathless lead: “What if almost the entire newspaper industry got it wrong?”

Well, the industry did get it wrong and did make a colossal mistake, but not the one that Shafer and University of Texas scholars Hsiang Iris Chyi and Ori Tenenboim think it made.

Summarizing Chyi’s and Tenenboim’s Reality Check research article in Journalism Practice, Shafer asks:

What if, in the mad dash two decades ago to repurpose and extend editorial content onto the Web, editors and publishers made a colossal business blunder that wasted hundreds of millions of dollars? What if the industry should have stuck with its strengths—the print editions where the vast majority of their readers still reside and where the overwhelming majority of advertising and subscription revenue come from—instead of chasing the online chimera?

In their research, which prompted Shafer’s column, Chyi and Tenenboim wrote that in the past 20 years “US newspapers, especially national and metro dailies, became more determined than ever to complete their transition from print to online. … ‘Digital first’ has become a mantra, a trend, and a strategy leading to the future.”

Shafer, Chyi and Tenenboim correctly chronicle the weak performance of American metro newspapers in the digital marketplace. But they wrongly conclude, as Shafer wrote, that “The key to the newspaper future might reside in its past and not in smartphones, iPads and VR. ‘Digital first,’ the authors claim, has been a losing proposition for most newspapers.”

Well, I used to work for a company called Digital First Media and at a newspaper-industry think tank, and I’ve visited more than 100 newsrooms and spoken at more than 100 newspaper-industry conferences and seminars, and I can flatly say that the industry never, ever adopted anything close to a digital-first strategy. (Update: Kurt Greenbaum responded on Facebook: “You’re being too kind. Not only did they never adopt such a strategy, they actively resisted tolerance of digital technology, much less acceptance of it.”)

The colossal mistake that the newspaper industry made was responding to digital challenges and opportunities with defensive measures intended to protect newspapers, and timid experiments with posting print-first content online, rather than truly exploring and pursuing digital possibilities.

When I worked at Digital First, I described our company’s name as an aspiration, rather than an achievement. I applaud our former CEO John Paton and our former Editor-in-Chief Jim Brady for leading us further and faster down the digital path than any other newspaper company. But that barely took us to the outskirts of digital experimentation.

One of the mistakes Chyi and Tenenboim made, and Shafer echoed, was to compare newspapers’ local print audience with their local digital audience and their digital revenues. What they failed to note is that non-newspaper companies have been building huge digital audiences, and collecting massive digital revenues, in those same communities.

Yes, it’s true that newspapers did a lousy job of generating digital revenue. But that doesn’t mean the opportunity wasn’t there. The Pew Research Center’s State of the News Media Report 2016 shows that total digital advertising revenue was $59.6 billion last year. Daily newspaper advertising peaked at $47.4 billion in 2005, before starting a decline that’s lasted for a decade and shows no sign of stopping. Even adjusting for inflation, digital advertising was $2 billion more last year (and rising) than newspaper advertising was at its peak. That’s the opportunity that newspapers missed.

Newspapers’ print ad revenue had dropped to $17.3 billion in 2013, the last time the Newspaper Association of America published figures. And the losses have continued. The Pew report, which examined figures from publicly traded companies, said 2015 resulted in those newspapers’ “greatest decline since the recession years of 2008 and 2009.” Clinging to print was assurance of a continuing downward spiral.

Huge startups such as Google and Facebook, large-but-smaller startups such as BuzzFeed and Shafer’s Politico and tiny startups such as the members of the Local Independent Online News Publishers all did a better job of pursuing digital opportunities than newspapers did. The newspapers’ colossal mistake wasn’t that they pursued digital opportunities too boldly but that they pursued them too timidly.

Shafer actually described the newspaper strategy fairly accurately: “to repurpose and extend editorial content.” He was just wrong about the “mad dash two decades ago.” Most newspapers moved reluctantly and slowly into the digital marketplace. Newspapers wrung their hands over every possible bad thing that could happen to them in the digital marketplace: “giving away” their product, “scooping themselves,” “cannibalizing” the newspaper. I heard each of those concerns dozens, if not hundreds, of times.

The few times I heard truly creative ideas for reporting news and generating revenue in the digital marketplace, they met with huge skepticism and open resistance. The newspaper industry settled for repurposing and extending editorial content in a marketplace that demanded and rewarded visionary new products.

I don’t know if a bolder strategy for newspapers would have resulted in better revenues and healthier companies. But I know this: The continuing collapse of newspaper advertising revenues is not because of a mad dash into the dangerous world of digital. And newspapers didn’t seriously try the recommendations of Newspaper Next, my Blueprint for the Complete Community Connection, Steve Outing’s membership model, Jeff Jarvis’s reverse meter or anything approaching a mobile-first strategy (and mobile advertising revenue has passed newspaper advertising). Maybe none of those strategies would have worked either. And maybe my proposed business model for obituaries wouldn’t have worked, and neither would any of the other revenue ideas that I and others suggested. But we’ll never know because the newspaper industry was too timid to attempt any of them.

Dave Winer explains the newspaper industry’s failure better than Shafer, Chyi and Tenenboim do: “Online journalism remains unexplored.”

Chyi and Shafer respond

I invited responses from Shafer, Chyi and Tenenboim. Here is Chyi’s email response:

“I cited your post about the Newspaper Next project in Chapter 3 (p. 35) of my book when I explained why I think newspapers’ technology-driven strategy is misinformed. You are probably not going to agree with me, which is fine.

“Here is a paragraph from that chapter FYI:

At this point, nothing is easier than blaming newspaper firms for not having acted more aggressively. Yet, what if newspapers were indeed more aggressive (whatever that means)? What if the fault is not in the newspaper industry but in Christensen’s theory and its impracticality? While the digital music model was often perceived as a success, when did we see a music label successfully transforms itself into a technology firm? Given the size and the local nature of typical U.S. newspapers, it is unrealistic to expect them to transform from the content business into the technology business or to compete effectively with online giants such as Google or Yahoo without taking industrywide actions. The truth is, as noted in the 2011 State of the News Media report, multiplatform newspaper firms have become increasingly reliant on aggregators and social networks to help draw audiences and must follow the rules of platform owners to get their content delivered. What’s worse, each new player takes a share of the revenue and, in most cases, also controls audience data (Rosenstiel & Mitchell, 2011).

I’m not familiar with Chyi’s book, though I presume I’ve linked to it correctly. I won’t comment on that passage by itself, and I don’t think I’ll be reading the book. But thanks for the citation.

Shafer at first asked where he had used the phrase “digital-first,” but conceded that point after I showed two places where he quoted the report using those words. His only other comment:

Also, socialism has never really been ‘tried.’

Twitter discussion of newspapers’ ‘colossal mistake

Filed under: Digital First journalism, Mobile opportunities, Newspaper Next Tagged: Chris Krewson, Dan Gillmor, Digital First Media, Hsiang Iris Chyi, Jack Shafer, Jeff Jarvis, Jim Brady, John Paton, Mathew Ingram, mobile-first strategy, Newspaper Next, Ori Tenenboim, Steve Outing


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